Allocating costs for a basket purchase
Keenum Company purchased a restaurant building, land, and equipment for $900,000. Keenum paid $100,000 in cash and issued a 20 year, 8 percent note to First Bank for the balance. The appraised value of the assets was as follows.
|
Land |
$ 240,000 |
|
Building |
600,000 |
|
Equipment |
360,000 |
|
Total |
$1,200,000 |
Required
a. Compute the amount to be recorded on the books for each of the assets.
b. Record the purchase in a horizontal statements model like the following one.
|
Assets |
= |
Liab. |
+ |
Equity |
Rev. |
Exp. |
= |
Net Inc. |
Cash Flow |
|||||||
|
Cash |
+ |
Land |
+ |
Building |
+ |
Equip. |
N. Payble |